Here's an article at Conglomerate Blog that raises an interesting question. Do financial market regulators believe in free markets? They discuss it as a reflection of the Efficient Market Hypothesis. In short, in an efficient market, no one player will make extraordinary returns over a long period of time. Only through market manipulation of some sort can exceptional returns over a long time be realized.
Why didn't regulators look at organizations with exceptional returns like, oh, Bernie Madoff, AIG, Fannie Mae, and Freddie Mac. Seeing an exceptional return should be a bright light shining on a suspect practice. The article quotes Ray Ball of the University of Chicago with the money quote, "If regulators had been true believers in efficiency, they would have been considerably more skeptical about some of the consistently high returns being reported by various financial institutions."
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